Friday, September 19, 2003

Economic Rebound? So Where Are the Jobs?

"The only way to sustain consumer spending is to employ more people." [Financial Times, London, September 19]

There was a larger-than-expected dip in first-time jobless claims this week, which boosted the stock market rather nicely. On the other hand, there were still about 399,000 first-time jobless claims; a dip in the number of people laid off this week is not the same as a dip in unemployment. People have been buzzing about "leading indicators" for months. The economy is improving, that's what they say every week. Tax cuts, interest-rate cuts, military spending... OK, so where are the jobs? The unemployment rate remained essentially unchanged in August, at 6.1% - which is to say, STILL VERY HIGH.

The quote above comes from the head of stock investment at JPMorgan Private Bank. This is not a "consumer advocate" or a labor representative, this is a man whose job is to tell millionaires and billionaires how to invest their money. He's stating the obvious... consumer spending (retail) will improve when more people have jobs.

So don't get fooled by conservative voodoo economics and the tax-cut patrol. The fact of the matter is this - if you cut taxes on corporations, they will hire more people... in Mexico, in Indonesia, in India, in China... NOT IN THE UNITED STATES. Consumer spending by Indonesian Nike factory workers isn't really going to stimulate the US economy.

The fact is, the travel sector (airlines, hotels, tourism industries) is suffering badly, hiring in the tech sector still hasn't recovered from the dot com crunch, the manufacturing sector has been shedding jobs since July 2000, wholesale trade employment is down, management jobs are down. Some sectors (health care, construction) are up, of course, but 6.1% total unemployment is still pretty damn high.

So, given that employment is not improving, and consumer spending won't improve until employment does, what's the government doing about unemployment? Well, they've cut 131,000 jobs since February. THANKS GOVERNMENT! ECONOMY LOOKS GREAT! HAVE A PRETZEL!